How the world’s resistance to China caught Xi Jinping off guard

People walking by a poster of Chinese President Xi Jinping in Beijing last year. (Andy Wong/AP)

By John Pomfret

December 21, 2018

Xi Jinping, heralded in the West as the most powerful Chinese leader since Chairman Mao Zedong, is heading toward failure. That’s the conclusion one could draw from Xi’s Dec. 18 speech commemorating the 40th anniversary of China’s far-reaching economic reforms.

Faced with a weakening economy, a trade war with the United States and an emerging united front against China in the West, Xi could have been expected to offer a bold new commitment to economic reform. Instead, he doubled down on his neo-Stalinist view that the Communist Party must exert control “over all tasks.” What’s worse, he failed to show any recognition of the hard choices China faces — supporting state-owned firms vs. the private sector, clamping down or opening up. In his 90-minute address, Xi promised all things to all people, in effect promising nothing to no one.

What a difference a year or two makes.

In January 2017, Xi took to the podium at the World Economic Forum at Davos to position China as ready to accept from an inward-looking U.S. the mantle of defender of the global trading order. Later that year, during the Communist Party’s 19th Party Congress, XI purged the top ranks of the party of all competitors. Then in March 2018, he rammed through changes to China’s constitution guaranteeing himself the opportunity of serving as China’s president until he dies. Xi had been called the Chairman of Everything. Now he was being called the Chairman of Everything for Life.

Propagandists began touting China’s mixture of merciless authoritarianism and mercantilist economic polices as a road map — called the China Solution — for the developing world. Xi’s signature foreign policy program — the Belt and Road Initiative — looked set to wrap the globe with Chinese-built railroads, ports and airports.

Xi held two seemingly successful summits with President Trump, in Florida and in Beijing. Chinese diplomats were confident that they could play the White House, sidestepping the National Security Council as they curried favor with American officials who appeared to be China’s friends.

Xi parried the Trump administration’s attempts to sideline China when it came to North Korea’s nuclear weapons, hosting Kim Jung Un twice. And he seemed to have minimized the blowback from the United States after he broke his promises to President Barack Obama not to militarize the seven Chinese-made islands in the South China Sea or engage in cyber-espionage.

Xi’s slip-ups started with the United States. He and his minions didn’t realize that Trump was serious about slapping tariffs on Chinese goods. As Trump expanded tariffs to include $250 billion in Chinese exports, a chill went through the rest of China’s economy, which had already begun to slow.

Today, foreign investment and retail sales are falling; property sales are flat. Taiwanese firms, which play a key role in China’s export sector, are moving some operations to Southeast Asia. And China’s private sector, the engine of China’s economy, could actually be shrinking. China’s government has begun to block the release of economic statistics to quash the spread of negative sentiment.

Xi appears to have been surprised by the growing Western unease with China. For decades, the Communist Party adhered to the catchphrase of the father of its reform program, Deng Xiaoping, for China to keep its head down, bide its time and build its national strength. Xi has junked this formula, and this bumptiousness has engendered blowback.

Spy agencies are now united in their belief that Huawei, China’s biggest telecommunications manufacturer, presents an intelligence threat to Western countries. The recent arrest in Canada of Huawei’s chief financial officer (and daughter of the firm’s chief executive officer) Meng Wanzhou on an extradition request by the United States is clearly part of a broader Western campaign to reign in Huawei’s heft.

China’s response to this critical matter has to be coming directly from Xi’s office, and it has been ham-handed at best. Since Meng was taken into custody, China has arrested three Canadians in an effort to cow Ottawa.

Xi’s Belt and Road Initiative is also coming under increasing scrutiny. Marketed initially as a Chinese version of the Marshall Plan, it is now being criticized from Papua New Guinea to Pakistan for creating a debt trap for developing countries desperate for infrastructure improvements.

Just a few years ago, Xi’s face was emblazoned on plates and posters around China and songs were released exhorting women to find a spouse like “Xi Dada.” Today, at least among China’s elite, the gloss is off.

Criticism of XI is becoming more pointed. Xi’s attempts to airbrush the contributions of Deng Xiaoping to China’s economic reforms were noted by none other than Deng’s son, Deng Pufang, who was crippled during the Cultural Revolution. He is not alone.

Fred Hu, a former Goldan Sachs executive and protege of China’s famed ex-premier Zhu Rongji, recently compared the current Chinese administration to the revanchist regime that took power after the Tiananmen Square crackdown of 1989.

China’s reforms were ultimately resuscitated by Deng Xiaoping himself. But Deng is is dead and Xi has sidelined all challengers. No wonder Hu was not optimistic that China’s situation would improve.